Does corporate registration constitute consent to be sued? The Supreme Court held that in the case of a Pennsylvania law that requires companies to be subject to any lawsuit in the state as a condition of registering to do business there, the answer is yes, and the Pennsylvania law comports with due process. The opinion, Mallory v. Norfolk Southern Railway Co., issued on June 27, 2023, raises questions about whether other states will follow Pennsylvania’s lead, significantly broadening exposure to lawsuits for companies around the country, but also leaves the door open for challenges to the applicability and scope of this holding.

Mallory, a Virginia resident, sued Norfolk Southern Railway in Pennsylvania state court for alleged exposure to carcinogenic toxins while he was an employee. Pennsylvania courts dismissed the suit for lack of jurisdiction, as Norfolk Southern Railway’s principal place of business was elsewhere and the injuries did not occur in Pennsylvania. Mallory appealed, arguing that Norfolk’s voluntary business registration in Pennsylvania constituted its consent to general jurisdiction, as per state law. The Supreme Court agreed.

Examining a “Very Old Question”

Courts’ exercise of personal jurisdiction is constrained by the Due Process Clause. For a state’s courts to exercise personal jurisdiction claims against defendants, known as general personal jurisdiction, defendants must have contacts with that state “so constant and pervasive as to render [them] essentially at home.”[1] That standard is typically satisfied where a company is incorporated or has its principal place of business. Absent this connection, defendants can only be sued in a state if the subject matter of the suit “arise[s] out of or relates to” the defendant’s in-state activities, which constitutes specific personal jurisdiction.[2] Pennsylvania’s law allows for general personal jurisdiction over a registered business even if it is not “at home.”

Justice Gorsuch, writing for the majority in only parts of the 5-4 decision (an interesting lineup, with Justices Jackson and Sotomayor voting with Justices Alito, Thomas, and Gorsuch), viewed this issue as a “very old question” first resolved in Pennsylvania Fire, which upheld a similar Missouri law in 1917.[3] The Pennsylvania Supreme Court had acknowledged Pennsylvania Fire, but held that subsequent “at home” standard “implicitly overruled” that case, an interpretation Justice Gorsuch rejected. The plurality holding came down to consent, which has long been an independent basis for personal jurisdiction. The plurality reasoned that since Pennsylvania’s jurisdiction requirement is stated as a condition for doing business, voluntarily registering after receiving “reasonable notice” of this requirement constitutes consent to jurisdiction. The Court dismissed Norfolk’s fairness arguments in light of the substantial business it conducts in Pennsylvania, as well as its contention that registration is a bureaucratic formality and therefore not valid consent.

There were notable concurring and dissenting opinions. Justice Alito concurred in part and in the judgment, agreeing that Pennsylvania Fire controls and consent remains an independent basis for personal jurisdiction, but arguing that Pennsylvania’s law could be challenged under the Dormant Commerce Clause, either due to discrimination against out-of-state companies or an undue burden on interstate commerce without a legitimate local public interest. This argument, however, was not raised here and therefore could not justify rejecting the Pennsylvania law. Justice Barrett filed a dissenting opinion, characterizing implied consent as a legal fiction that circumvents due process and the sovereignty of each state that seeks to adjudicate cases actually arising there.

The holding appears to implicate federal jurisdiction as well: Federal Rule of Civil Procedure 4(k)(1)(a) provides that the service of a summons establishes personal jurisdiction over a defendant who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located. Thus, if a company is registered to do business in a certain state and that constitutes consent under that state’s law, the company would be subject to personal jurisdiction in that state’s federal court under Mallory.

As for long-arm jurisdiction, it is not clear whether Mallory extends jurisdiction in the case of a state long-arm statute that extends jurisdiction to “the furthest extent of due process” but does not explicitly state that registration confers consent. Mallory does hold that subjecting a corporation to jurisdiction by registration is within the “extent of due process” and there could be an argument that the corporation should have known that it would be constitutional to subject it to jurisdiction by registration, and thus consented to jurisdiction by registering. The better argument, however, is that absent an express provision regarding consent, it should not be assumed as it is not generally the law and falls outside of ordinary expectations. And presumably, the traditional minimum contacts analysis would still apply, though some courts may not agree. Justice Alito, as noted above, thinks that kind of effort may run afoul of the Dormant Commerce Clause, even if it does not run afoul of due process.

What’s Next for Companies?

Following this decision, other states could follow Pennsylvania’s lead and pass laws requiring consent to personal jurisdiction for all registered businesses, substantially increasing companies’ risk of being sued anywhere they do business. Five justices agreed that consent remains a valid basis for general jurisdiction, and with reasonable notice, it will become harder to plead ignorance as to the jurisdictional implications of registration.

Two factors may forestall this outcome. First, a future lawsuit could raise the Dormant Commerce Clause argument outlined by Justice Alito or the state sovereignty concerns raised by Justice Barrett to persuade a majority of the Court that consent-based jurisdiction should not override other Constitutional prerogatives. Second, states may avoid passing similar laws out of fear that they would disincentivize companies from doing business there. We will closely watch the development of both factors, and others, to determine the impact of the Court’s holding in Mallory.

This article was co-authored by Rebecca Hughes Parker, counsel, Jeff Zachman, partner, and Sophia Slater, summer associate.

[1] Daimler AG v. Bauman, 571 U.S. 117, 127 (2014).
[2] Ford Motor Co. v. Montana Eighth Judicial District, 141 S. Ct. 1017, 1018 (2021).
[3] Pennsylvania Fire Insurance Company of Philadelphia v. Gold Issue Mining & Milling Co., 243 U.S. 93 (1917).